Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of First Bank of Nigeria Sort Codes in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...
- Advertisement -
  • Land border closure drives up revenues
  • Opex remain high
  • Improving leverage position

FMN reaps the benefit of border closure as food revenue turns a corner

Recently, Flour Mills of Nigeria (FMN) released its 9M 2020 (Apr 2019 – Dec 2019) results where it announced a 5.7% y/y growth in revenue to N423.5bn, from N400.6bn in 9M 2019. We note that the improved performance came largely in Q3 2020 with revenue in Q3 climbing 12.3% q/q to N152.7bn. The improved performance in Q3 is evidenced in the 8% growth in volumes sold, as against 6% in the first 2 quarters of the financial period. Across business segments, food revenue turned a corner growing 3.0% y/y to N262.1bn in 9M 2020. The improvement in food revenue was driven by improved volumes in pasta and bread flour which we believed was as a result of the  land border closure which prevented  influx  of  lower  quality flour,  while consumers switched to pasta products as an alternative to rice. The fastest-growing business units as at 9M 2020 were agro-allied (+19.6% y/y to N81.3bn) and sugar (+13.5% y/y to  N67.6bn)  while support services  (-32.8% y/y  to  N12.5bn)  disappointed.  The growth in agro-allied business was driven by higher volumes in fertilizer and animal feed sales.

Cost of sales edge higher on higher volumes

The cost of sales grew 6.1% y/y to N375.7bn in 9M 2020 from N354.0bn in 9M 2019. The increase in the cost of sales was largely in line with growth in revenue albeit higher by 0.4ppts. Thus, we think the growth in the cost of sales was largely volume-driven. The growth in the cost of sales was driven by higher material costs (+5.6% y/y to N323.4bn) and factory staff payments (+12.5% y/y to N13.0bn).  Consequent to the slightly faster growth in the cost of sales, gross margin was pressured lower by 0.3ppt y/y to 11.3% in 9M 2020. Nevertheless, gross profit was still higher by 2.6% y/y to N47.8bn in 9M 2020 from N46.6bn in 9M 2019.

- Advertisement -

Operating expe nses remain high…puts pressure on operating income

The company recorded a 13.4% y/y increase in operating expenses driven by increases in selling & distribution expenses (up 8.0% y/y) and administrative expenses (up 15.6% y/y). Increased spending on advertising, in a bid to expand B2C channels due to the presence of better margins, continues to drive the increase in Opex. The faster pace of increase in operating expenses weighed on EBITDA as it declined 5.8% y/y to N34.6bn for 9M 2020, from N36.8bn in 9M 2019. Increase in depreciation & amortization (+5.1% y/y to N9.9bn in 9M 2020) and a decline in net operating gain (-66.9% y/y to N518.4m) pressured operating profit lower, which was down 9.6% y/y to N24.7bn in 9M 2020.

Read Also:  Senate 2019: Kogi East Elders Endorse ADC’s Victor Adoji

Leverage position continues improvement

The company’s sustained efforts at deleveraging its balance continued to bear fruits as finance costs dipped lower by 20.7% y/y to N13.1bn in 9M 2020, from N16.6bn in 9M 2019. Finance income increased by a 35.8% rise to N728.3m in 9M 2020. Consequently, net finance costs slid lower by 22.6% to N12.4bn in 9M 2020, from N16.0bn in 9M 2019.

- Advertisement -

Against this backdrop, profit before tax edged higher by 9.0% y/y to N12.3bn for 9M 2020, from N11.3bn for 9M 2019. Tax expense jumped higher, recording a 22.1% y/y increase to N4.1bn, with management declaring it took a prudent approach in estimating the impact of the finance bill on its tax assessment. Nevertheless, net income climbed higher by 3.4% y/y to N8.2bn in 9M 2020. However, earnings per share for 9M 2020 declined to N1.84/s from N1.89/s in 9M 2019 on the back of lower net income attributable to shareholders, with profit growth driven by subsidiaries.

Overall view – revenue recovers but operating performance remains a concern

Flour Mills recorded a significantly improved performance in Q3 2020 as the company recorded impressive revenue growth while reining in on operating expenses within the quarter, while the high base in H1 2020 still created pressures. In our last note, we highlighted how we expected the border closure to impact flour and pasta sales as well as sustained recovery in sugar, following the reduction in the influx of smuggled low-quality sugar. These factors played out within the quarter. However, we remain cautious about the strength of this recovery as the reopening of the border may bring in renewed pressures, from smuggled low-quality flour and sugar coupled with an increase in rice imports, thus weakening demand for pasta products. Nevertheless, we expect FMN to continue to be resilient and to post improved performance.

Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur

- Advertisement -
Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand SpurFlour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand SpurFlour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur

Latest News

ECOVACS ROBOTICS Introduces 9-in-1 DEEBOT T9 In Indonesia – Our Best DEEBOT Just Got Better!

“The Best Just Got Better" with the first robotic vacuum cleaners in the market to combine upgraded vacuuming and mopping capabilities in one go

 

JAKARTA, INDONESIA - Media OutReach - 13 April 2021 - ECOVACS ROBOTICS, the world's leading home service robotics maker, today launched the DEEBOT T9, the first models with intelligent 9-in-1 obstacle avoidance robotic vacuum cleaner that combines powerful vacuuming and mopping functions with a built-in mobile air freshener. The upgraded DEEBOT T9 with these cutting-edge features is more powerful and smarter than ever before.

Read Also:  Sanwo-Olu Commissions First Indigenous Medical Face Mask Factory in Lagos


Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur


Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur


Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur


DEEBOT T9 raises the bar for home cleaning with 9 stunning features, including the ECOVACS' leading TrueDetect 3D 2.0, a real-time strategic obstacle detection and avoidance technology; TrueMapping 2.0 for precise navigation; ECOVACS HOME App upgraded with 3D Map, and OZMO™ Pro 2.0 Electric Oscillating Mopping System that ensures stubborn stains are removed more efficiently and quietly, compared to previous generation.


"We keep a close eye on market demand and there was a clear indication that consumers want smart products that make homecare even simpler, doing as much and as thorough as they can, in one go. ECOVACS is committed to giving consumers the latest in smart and unique cleaning experience," said David Qian, Chief Executive Officer of ECOVACS ROBOTICS. "We've introduced our new-generation technologies, combined with multiple features while adding even more to our DEEBOT T9 to make sure every inch and floor surface is covered. Our Best DEEBOT Just Got Better."


Upgraded ECOVACS HOME App with Improved Obstacle Avoidance and Navigation Technology


TrueDetect 3D 2.0 technology comes with an upgraded algorithm to quickly detect different types of obstacles and strategically avoid them. The DEEBOT T9 can detect object sizes right down to mere millimeters, which is ten times more accurate than products using traditional infra-red technology, with a detection range of 70-350 millimeters. Moreover, DEEBOT T9 can navigate smoothly in different indoor environments and lighting conditions without any interruptions, even in total darkness. TrueDetect 3D 2.0 technology allows the robotic vacuum cleaner to avoid collisions, entanglements, or disruptions, so users do not have to monitor the robot and clean it continuously.

Combining TrueDetect 3D 2.0 and TrueMapping 2.0 with 3D Maps brings a whole new level of automated cleaning efficiency and flexibility for users. They can quickly locate the robotic vacuum cleaner's exact position via the 2D and 3D Maps. They can also manage their entire cleaning task on-the-fly, by toggling between the 2D and 3D Maps with the upgraded ECOVACS HOME App.

The new ECOVACS HOME App is designed for intuitive use, enhancing the user experience and reinforces the ECOVACS branding. The App is easy to navigate, offering users an optimal cleaning route. The interface integrates all the common features so that users can access critical functions easily. They can customize the amount of water used, suction power, cleaning times, and routes for different rooms.


A Luxurious Cleaning Experience with Built-in Air Freshener


The DEEBOT T9 is the first in the industry to clean floors and freshen the air at the same time. Connected to the DEEBOT's mobile system, the air freshener gives users a vacuuming and fragrance experience that goes beyond traditional cleaning.

The air freshener's unique design releases the fragrance onto the floor directly to remove musty and pet odors, while the fan at the bottom of the air freshener unit spreads the fragrance evenly.

The air freshener uses replaceable capsules, that can last up to 60 days, featuring three kinds of fragrances. Users can choose to switch the air freshener on or off using the ECOVACS HOME App, and extend its lifespan.


Powerful In-depth Cleaning Performance with OZMO Pro 2.0 and Auto-Empty Station Compatibility


The DEEBOT T9 comes with latest OZMO™ Pro 2.0 Electric Oscillating Mopping System with a newly designed motor and movement structure that minimizes noise.

The enhanced suction power of 3000 Pa also raises the bar in cleaning performance. The high-strength fiberglass structure keeps the suction power consistent when vacuuming both hard floors and carpets. The high-frequency vibration of up to 480 times per minute increases the mopping performance, making it comparable to an electric mop.

The DEEBOT T9 uses a disposable mopping pad that can be safely discarded immediately after cleaning. The specially-designed microfibers absorb water evenly, efficiently capture dust, and reduce residual water stains. The composite structure increases friction between the mopping pad and the floor and helps the OZMO™ Pro 2.0 Electric Oscillating Mopping System effectively remove stubborn stains on the floor.

A power-up kit is available for the DEEBOT T9 that further enhances the cleaning performance and user experience. The Auto-Empty Station, which clears the robot's dustbin automatically after cleaning with minimal human intervention, is also compatible with DEEBOT T9.


Pricing and Availability


DEEBOT T9's suggested retail price is IDR 8.29 Million. It will be officially available at Shopee with special price of IDR 8.09 Million and comes with a IDR 200K discounted voucher and a free giftpack on April 17 to 18 ECOVACS X Shopee Brand Day.


It is also available at Lazada, Tokopedia, and Blibli from April 19 onwards with an IDR 200K discounted voucher and free giftpack as launch promotion until April 22.

For more information, please visit ecovacs.com or connect with us on Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand SpurFacebook and Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand SpurInstagram.


About ECOVACS ROBOTICS

Innovating Since Day One – Creating the Intelligent Home.


At ECOVACS ROBOTICS, we care about innovating solutions to enhance your lifestyle. Based on a deep understanding of use cases and consumer experiences, we design robots that help you "live smart, enjoy life."


With over 20 years of design and industry-leading research, we have led the market as homes become more intelligent and responsive. We are building a world where your home asks less of your attention, becomes more seamless and powerful, and frees you to spend more time doing what you love.


Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Flour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand SpurFlour Mills Earnings Update 9M 2020: Strong Q3 provides support for 2020 financial year - Brand Spur